Dozens of public companies got $300M in coronavirus small business loans

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Dozens of publicly traded companies — including some with checkered pasts — took $300 million in government-backed loans meant to protect small businesses during the coronavirus crisis, a new report says. At least 75 public firms got low-interest loans through the Paycheck Protection Program, the Trump administration’s $349 billion small-business aid package that ran out …

Dozens of publicly traded companies — including some with checkered pasts — took $300 million in government-backed loans meant to protect small businesses during the coronavirus crisis, a new report says.

At least 75 public firms got low-interest loans through the Paycheck Protection Program, the Trump administration’s $349 billion small-business aid package that ran out of money last week, an Associated Press investigation found.

A quarter of those companies had warned investors that they were at risk of folding before the pandemic upended the economy, while others had been fined for sketchy financial behavior, according to the Tuesday report. And some managed to get funds despite being worth hundreds of millions of dollars or employing thousands of people.

Among the lucky companies were famous restaurant chains like Potbelly Sandwich Shop, Ruth’s Chris Steak House and Shake Shack, which has pledged to return its $10 million loan. But the list also reportedly includes some lesser-known firms that recently flirted with financial collapse.

Biotechnology firm Wave Life Sciences got a $7.2 million loan just weeks after telling investors it could be “many years” before it had any products ready to sell, according to the outlet. And Helius Medical Technologies reportedly received $323,000 despite warning in its most recent annual report that it did not expect its cash supply to last past May.

Funds also reportedly went to companies that had paid hefty penalties to the Securities and Exchange Commission, such as California-based Quantum Corp., which got a $10 million loan. Allegations that the data storage firm overstated revenues because of accounting errors led it to pay regulators $1 million last year, the AP reported.

Marrone Bio Innovations similarly got $1.7 million even though it agreed to pay roughly the same amount — $1.8 million — in 2016 because an executive allegedly puffed up its financial results, according to the report.

Companies the AP identified said they applied for the loans to avoid laying off workers amid the coronavirus crisis. The pandemic has already led to widespread job losses, with 22 million Americans seeking unemployment benefits in a month.

“We owe it to our employees — who’ve stuck with us through a long and difficult turnaround — to do everything we can to save their jobs during this crisis,” Quantum spokesman Bob Wientzen told the AP.

The Small Business Administration, which administers the loans, did not immediately respond to an email asking whether the companies qualified for funds and whether the agency would move to claw back any of the loans. But Treasury Secretary Steven Mnuchin and SBA administrator Jovita Carranza touted the program last week by saying about three quarters of the loans were for less than $150,000, “demonstrating the accessibility of this program to even the smallest of small businesses.”

The revelations came amid a debate in Congress over adding more funding to the Paycheck Protection Program, which ran out of money with many small businesses still waiting for help. Republicans have pushed for another $250 billion for the program but Democrats want the next package to include extra aid for hospitals and state and local governments.